The meaning of Aaron Swartz

from Peter Radford

This weekend has seen a flurry of comment about Aaron Swartz, whose recent suicide has set me thinking about the way in which society is dogged by bureaucracy that serves either itself or a limited elite. So many of the rules that beset us all on a daily basis exist only to protect the interests of those with access to power. The rest of us are left to flounder on our own, and to conform as best we can to the contours of society as we find them. Our ability to shape those contours is minimal.As a result, we have precious few moments when our voices really matter.

Swartz was no anarchist. He was a liberal and someone who understood that most bureaucracy is a thin veil drawn over deep seated power structures.

He was being threatened by a massive legal challenge in Massachusetts.

Will the Romney campaign lead Democrats to adopt better economics?

from Dean Baker

Now that Representative Paul Ryan has been added to the ticket we’ll have to see the extent to which Governor Romney embraces his running mate’s rather extreme economic positions. But earlier in the week, the Romney economic team made its first effort to argue for the merits of Romney’s somewhat more moderate economic plan. It went down in flames.

The basic problem is that they have an impossible story. They want to try to blame President Obama for the current weakness of the economy. Their argument of necessity focuses on the weakness of the recovery since their guy, President Bush, was calling the shots went things fell apart. This inconvenient fact means that the Romney crew can’t focus on the real problem, the severity of the downturn.

Weekend Thoughts

from Peter Radford

Some quick thoughts for a summer weekend:

I am reading Richard Posner’s book: “The Crisis of Capitalist Democracy”. He and I do not agree on much, if anything, but the book is s decent read and gives a perspective worth knowing. But I could not avoid choking on my coffee when he describes the activities and policy decisions way back during the height of the crisis. Various actions were considered, most dismissed as inappropriate. My favorite, nationalization, was knocked down early. Why? Let Posner tell us: 

Eurozone austerity faces increasing political challenges as economy worsens

from Mark Weisbrot

It has become a ritual: every six months I debate the IMF at their annual meetings, most recently represented by their Deputy Director for Europe. It takes place in the same room of that giant greenhouse-looking World Bank building on 19th Street in Washington, D.C. And the IMF’s defense of its policies in the eurozone is not getting any stronger.

Maybe it’s because most economists at the IMF don’t really believe in what they are doing. The Fund is, after all, the subordinate partner of the so-called “Troika” – with the European Commission and the European Central Bank (ECB) calling the shots. And most Fund economists know their basic national income accounting: fiscal tightening is going to make these economies worse, as it has been doing. Those that have tightened their budgets the most, e.g. Greece and Ireland, have shrunk the most – as would be predicted. The Spanish government, which today announced a 52 percent unemployment rate among its youth, has projected that the planned budget tightening for this year would by itself take 2.6 percentage points off of 2012 growth.

Argentina’s critics get it wrong again

from  Mark Weisbrot

The Argentine government’s decision to re-nationalize its formerly state-owned oil and gas company, YPF, has been greeted with howls of outrage, threats, forecasts of rage and ruin, and a rude bit of name-calling in the international press.

We have heard all this before. When the Argentine government defaulted on its debt at the end of 2001, then devalued its currency a few weeks later, it was all gloom and doom in the media. The devaluation would cause inflation to spin out of control, the country would face balance of payments crises from not being able to borrow, the economy would spiral downward into deeper recession.

Nine years later, Argentina’s real GDP has grown by about 90 percent, the fastest in the hemisphere. Employment is at record levels, and both poverty and extreme poverty have been reduced by two-thirds. Social spending, adjusted for inflation, has nearly tripled.

Mélenchon could change French politics with strong showing

from Mark Weisbrot

France’s conservative President, Nicolas Sarkozy, ran for office in 2007 on a program of making the French economy more like that of the United States. He picked a bad time for that: the U.S. was on the brink of its worst recession since the Great Depression, and would help drag down Europe and much of the world economy as the American economy collapsed. He probably wouldn’t want to say these things today, after the U.S. has had four years with hardly any economic growth at all.

But Sarkozy did succeed in making the French economy more like the U.S. in some ways. After being one of the few high-income countries that didn’t have an increase in inequality from the mid-1980s to the mid-2000s, France has become more unequal since Sarkozy was elected. For example,

Forbes’ update on the state of plutonomy or “democracy for the few”

from Edward Fullbrook

The current Forbes, the bi-weekly of The One Percent, features an update on the current state of what it, like Citigroup, calls plutonomy.  Also called by its insiders “democracy for the few”, this is the basic economic-political reality of our time, which one-percenters chat about daily and which the rest of us generally pretend doesn’t exist.  Skeptics of the analysis of plutonomy offered in “The Political Economy of Bubbles” in the current issue of RWER are encouraged to read Forbes’ plutonomy update.   Below is a taster. 

The new “us versus them” is not like the racism of colonial times. This is starkly different. It’s the 99% versus the 1%, . . .

Plutonomy Bubble Number Three

from Edward Fullbrook

“The Political Economy of Bubbles”
http://www.paecon.net/PAEReview/issue59/Fullbrook59.pdf

The new political economy of the Eurozone

I might be boring the pants off you with my European Central Bank Posts – but what’s happening in Europe is going very fast and it’s important. Power (lots of it) is shifting towards Frankfurt and Brussels. How will this power be used?

First, the shift. A quote from a recent speech from José Manuel González-Páramo, member of the board of the European Central Bank:

“toxic and destructive” Goldman Sachs and the Obama administration

from Edward Fullbrook

As you may have heard in the news, yesterday one of the key directors of Goldman Sachs, Greg Smith, published in the New York Times his long letter of resignation.  It begins:

TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.

Given the degree of attention that the international media is today giving this mini event, it seems appropriate to republish here a table from my RWER paper, published on Monday, “The Political Economy of Bubbles”.  The table below, which is largely based on an article by fflambeau, details 32 relationships, financial and otherwise, between Goldman Sachs people (“morally bankrupt” says Smith) and the Obama Administration.

The Plutonomy Reports

from Edward Fullbrook

On this blog, posts dealing with plutonomy have consistently been the most heavily viewed. Given this interest, here is one of several sections on plutonomy from my paper “The Political Economy of Bubbles” in the new issue of Real-World Economics Review. It is centered on the three Citigroup Plutonomy Reports.

Why Free-Market Economics is a Fraud

from Ian Fletcher

If there’s one thing everyone in America knows, it’s that free-market economics is true and free markets are best. 

After all, we’re not communists, are we? They starved and lost the Cold War because they believed otherwise. And their watered-down European cousins the socialists? More of the same, only less so. Even liberals get this nowadays. All hail the free market! 

Trouble is, things “everyone” knows are often wrong. And this is no exception.

It’s time to start getting honest about a very simple fact: Nobody, but nobody, really believes in free markets. That’s right. Not the Republican Party, not the libertarians, not the Wall Street Journal, nobody. 

Regime change (Gini chart)

from John Schmitt

Over the last decade, as economic inequality in the United States was growing, income inequality was on the decline in most of Latin America. In March, economists Darryl McLeod and Nora Lustig circulated a working paper (pdf) arguing that, in Latin America, the “social democratic regimes in Brazil and Chile were more successful at reducing inequality and poverty than the so-called populist regimes of Argentina, Bolivia, and Venezuela.”

Politics Matter

from John Schmitt

In a new CEPR report (pdf), Alexandra Mitukiewicz and I argue that the national political environment, not globalization or technology, is the most important factor driving long-run changes in unionization rates in the United States and other rich economies.

Since 1980, changes in union coverage (the share of the workforce covered by a collective bargaining agreement) are strongly correlated with a country’s postwar political tradition.

European Foolishness

from Peter Radford

There isn’t much to say: anyone who thought that the appointment of a couple of tired, traditional, economists as heads of Greece and Italy respectively would cure anything was decidedly deluded. Lucas Papedemos and Mario Monti are not elected, so they have little, if any, democratic legitimacy and yet will implement drastic revisions to the social contracts and institutions of their nations. In my opinion this rule by technocrats is just another example of the attempt by a failed elite to impose its unpopular vision on Europe.

#OccupyWallStreet: The Real Tea Party

from Dean Baker

Many people have forgotten that the Tea Party movement had its origins in the anti-TARP protests in the fall of 2008. Millions of people across the country were outraged that the government was going to loan hundreds of billions of dollars to the banks that had brought themselves and the country to the brink of ruin through their own greed and incompetence. Just as these people feared, the bailouts saved the banks, leaving their high-flying executives largely unharmed, but did little to get the economy back on its feet.

The 99 Percent Movement: Tactical Briefing #15

from Edward Fullbrook

It was the people at Adbusters who conceived and launched the Occupy Wall Street Movement, which now that it has gone global is more generally known as the 99 Percent Movement.  Below is Adbusters latest tactical briefing. 

Links for following the 99 Percent or Occupy Wall Street Movement

from Edward Fullbrook

For following the 99 Percent or Occupy Wall Street Movement, I recommend these Aljazeera links:

US corporate profits after tax 1990 to 2011

from David Ruccio

US corporate profits after tax 1990 to 2011

“The End of Loser Liberalism: Making Markets Progressive”

In his new book, The End of Loser Liberalism: Making Markets Progressive, Dean Baker argues that progressives hurt their cause whenever they accept the conventional wisdom that conservatives are for the “free” market while progressives are for government intervention in the market economy.  In a much-needed counter-narrative, Baker stresses that this is both bad policy and bad politics.  He takes apart this fundamental misframing of economics and details how conservatives actually use the government to twist markets to their advantage and points out that they are just smart enough not to own up to it.